The Forex Market Insight Report shows charts on different major currencies and commodities, with brief commentaries on how new data releases and news cause movements in the market.

Headline:

  • EU summit disappoints with details of rescue plans to be released later this week
  • Risk instruments start week lower on EU news; Euro gaps about 50 pips lower
  • Friday saw improvement in risk appetite on EU hopes and rumours of QE3
  • Euro and AUD both close near weekly highs on Friday; but losses seen in early Monday trading
  • Dow 2.3% higher on Friday, commodities see small gains
  • EU plans to be the major driver this week; AUD PPI (today) and CPI (Wed) also key

AUD/USD
The Aussie closed strongly on Friday night and this is suggestive of a bullish tone to the week. A pullback towards 1.0200 could be seen as a medium-term buying opportunity. Apart from the EU’s plans, sentiment this week will be driven by inflation numbers due today at 11.30am and Wednesday. High readings make rate cuts unlikely.

GOLD
Any upside for gold looks capped at 1650 with the bearish wedge pattern suggesting that the bears are now in control. Any move back to 1650 will be seen as a selling opportunity.

EUR/USD
Playing the range appears to be the strategy for the time being Friday’s move to 1.3900 yet another opportunity to sell. Of course, in the near term, news flow from the EU will drive prices, but any move to either end of the range is likely to see trading interest.

GBP/USD
The pound finally broke out of the range with the 1.5850 level that had provided resistance breached in Friday’s trading. This now presents a more bullish tone and traders will be waiting for a pullback towards 1.5850 in order to take new longs.

USD/JPY
The dollar-yen saw masses of selling on Friday night after breaking below support at 76.60. We saw the pair make new lows above 76.00 and this opens the door for intervention from the Bank of Japan. The market is likely to be more focused on the downside for the moment with any move back to 76.60 likely to generate selling interest.

SILVER
Silver’s continuing to have trouble up at 31.50 but the picture is less clear after silver saw good gains on Friday. The market is likely to take a neutral approach to silver until we see a clearer signal.

USD/CHF
As we discussed on Friday, the break below 0.8880 has changed the market view to bullish and the market will now be more focused on the downside. Any move back to 0.8880 could be seen as a selling opportunity.

GBP/JPY
No change on the sterling-yen with the price action contained within the trading range. The market will continue to look for opportunities at either extreme of the trading range.

AUD/JPY
The Aussie-yen looks to be forming a consolidation pattern and this could suggest we will soon see a bullish break higher. In the near term, a break above 79.20 could trigger buying, but the market is likely to wait for the break of major resistance at 80.00.

OIL
Crude is still trapped between the major levels with support seen at 84.00 and resistance at 90.00. In the near term, there remains a bullish bias on crude, with any pullback toward support likely to be seen as a selling opportunity.